Apple’s Win Could Hurt Them More Than Samsung.

by David Klemke on August 28, 2012

I haven’t talked about the Apple vs Samsung court case that’s been raging on for the past year mostly because I didn’t feel like there was anything interesting to say about it. Usually these kinds of court cases are business negotiations that have gone south and they’re just using the legal system to figure out who should be paying who for what. The Apple vs Samsung case was slightly different as it appeared to be more of a move from Apple to try and block Samsung out of the USA market, one where they’re starting to get quite the foothold thanks to their flagship Galaxy devices selling like the proverbial hotcakes. Samsung isn’t completely innocent in this regard either, pulling the same kind of tactic in other markets.

Of course the news recently broke that after 2 days of deliberation the jury on the Apple vs Samsung case returned the verdict that Samsung had indeed wronged Apple and were awarded a cool billion dollars in damages. The damages were broken down on a per device level based on the jury’s judgement of how much they infringed on what the appropriate damages would be. No matter what the decision in the case ended up being there was always going to be something of a media storm following it, and boy was there ever.

On the surface it didn’t look like the fallout from the case was doing Samsung any favours. Trading for Samsung stock closed 7% down on the day after the announcement was made, wiping $12 billion of value from the company and making the fine look like a pittance by comparison. Of course the verdict isn’t completely finalised yet with a potentially lengthy appeals process (and issues with the way the jury decided the verdict could have the whole thing thrown out) to come but there’s no denying that the immediate down turn in the confidence that the market has in Samsung will affect them adversely in the short to medium term.

However Apple may have set themselves up for an unlikely consequence: they put Samsung in the same league as them.

Us high tech geeks could rattle off the differences between Apple and Samsung’s products for hours and realistically they’re completely different beasts. However with this very public lawsuit Apple has gone on record saying that Samsung is basically equivalent to them and that hasn’t gone unnoticed by the general public. Indeed this was very much the same way Samsung managed to establish itself as a dominant player in the LCD TV business, often being touted as the cheaper version of the higher quality Sony¹. The same thing appears to be happening in relation to Apple with Samsung more than happy to be second fiddle in such a large market. Indeed the numbers back this idea up, especially when you look at the sales figures of their recent flagship product, the Galaxy S3.

I didn’t come up with this idea myself however, that credit goes to two postsI caught on Google+. It still might be wild speculation but the history of similar things happening with Samsung and other competitors does lend some credence to the idea. Whether Samsung can capitalize on that, especially with the market looking down on the ruling, is something that we’ll only know as time goes on. Their stock hasn’t tumbled any further though so there’s some indication that the initial fine shock might’ve been just that.

Personally I feel it highlights the problems with the USA’s current patent system more than anything else. Instead of them being used to encourage innovation, as was their original intent, they’re now far more likely to be used as weapons in big lawsuits or in negotiations over licensing fees. How we go about solving that problem isn’t something I have a good answer for but until we do we’ll continue to have these kinds of high profile cases which tie up resources that could be put to much better use.

¹I will freely admit that I don’t have anything solid to back this assertion up apart from the countless hours of research I poured into finding the best TV for the right price all those years ago. A cursory search finds threads like this one which echo the sentiment I’m referring to.